The impact of China's entry into WTO on agriculture poses the biggest current threat to the government.
Official estimates suggest that cuts in import tariffs and lower subsidies on exports will lead to the loss of 13 million jobs among those who grow wheat, cotton and rice, because they will be unable to compete with cheaper imports.
Worst-hit will be those areas where peasants tend tiny plots of poor land far from the main urban centres. About 120 million people live below the poverty line in these areas, and the gap between rural and urban incomes is larger than any time since the 1949 revolution. Riots and demonstrations are widespread.
'China can never compete with the United States, Canada and Australia in the farm arena,' said the China International Capital Corporation. 'China can never modernise its economy without drastic changes in population structure.'
It said that it would be a tremendous task to create jobs for and retrain the millions of people who will be displaced, especially as the welfare system does not cover farmers. 'One of our major concerns regarding China's WTO membership is how to preserve social stability under high unemployment in the transition period.'
The plight of impoverished farmers has worsened since 1996, with prices of farm goods declining and the growth in their incomes falling each year. The average farm income last year was 1,640 yuan, (HK$1,525) an increase of two per cent over 1999, while the average urban income rose seven per cent to 6,280 yuan.
